In the world of investing, we look at businesses and the revenue they generate now and in the future. Whether you're looking at companies on the stock market or small crypto altcoin startups, analyzing revenue is an incredible insight you should have when investing.
This morning, I was listening to the BG2 podcast - it's a new podcast with Bill Gurley and Brad Gerstner. If you don't know them, they've both been featured on the All-In Podcast and are well known VCs/Investors in the Startup World.
One of the first topics they talked about was the recent string of massive acquisitions in the LLM (Large Language Model) space, more popularly known as AI Models.
Microsoft invested $1B in 2019 to OpenAI. In 2023, they then announced a $10B Investment. The exact details are private but a few things are known:
- this is a multi-year deal with funding to be released in tranches over time
- part of the deal is that it's not $10B in cash. Some of this are non-cash benefits like cloud compute credits
As you can imagine, a company like OpenAI will need lots of cloud compute. These credits are valuable to OpenAI and they also add revenue to Microsoft's cash flow statement but is that high quality or low quality revenue?
Bill Gurley argues in the podcast I mentioned above that this is low quality revenue. It is not real cash flow for Microsoft.
He uses an analogy and says imagine a startup that generates 100% of their "revenue" via cloud compute credits. This startup will put all this revenue on their balance sheet but their effective cash flow is $0. Is this a healthy business? One that you'd want to sink your teeth into?
Cash Flow in Crypto
The timing of this was quite funny since I had just seen a Tweet this morning by a crypto project that I won't name. The project is NFT / Blockchain Gaming related.
They listed out their sources of cash flow and I'll summarize them with broad strokes:
- Token sales
- NFT primary minting sales
- NFT Secondary market sales
You get the picture? Their only source of revenue is token sales. There's no business model there. That's straight up hopium.
When you look around to most crypto projects (hell, even a lot of startups are like this too), they don't have a proper business model now or even in the future. They're entirely reliant on hype cycles and getting investors in later to pump their bags.
If you have been following LEO for any measurable amount of time, then you'll know we have an intense focus on generating real revenues. I would define these as high-quality revenue sources:
These forms of revenue bring in tangible outside capital into the LEO Token Economy. The ad revenue is paid by Web2 (Google, Currently). The Premium Subs are paid by users.
The last two are under development currently - The Promotions are paid by creators. LeoSubscriptions are paid by users to their favorite creators (like Substack).
These sources of revenue are high quality - using BG's terminology - because they bring in actual cash flow. They are not credits on the balance sheet but actual $$ flowing into the economy on a monthly basis.
Right now, these forms of revenue are relatively small. Ad Revenue is about $1k to $1500 per month. Premium is $2k per month. Promotions and LeoSubscriptions aren't released yet.
The key is that we aren't sitting here and saying that the LEO business model revolves on token sales.
What is the Business Model and is it Sustainable?
This is a good question to ask whenever you look at any startup. For LEO, our business model is to grow our Monthly Active Userbase (MAUs) and generate revenue through ads, premium subscribers, promotion by creators and LeoSubscriptions from creators to users.
In short: grow our userbase and monetize the platform.
When you look around to other crypto projects you're familiar with, ask yourself the above question. Do you find that they have solid business models now and in the future? Have they explicitly laid out that business model and an actionable plan to achieve profitability?
1,000 Premiums
Now, this whole conversation was even more interesting me in the current state of LEO. You have likely seen a push I've made with the LEO Team and our Community to grow the # of Premium Subscribers.
We recently added a ton of new features and also changed 
These changes along with the push is all aimed at driving up the amount of premium subs that INLEO has. It's time to fully monetize the userbase we currently have and set ourselves up for profitability. This will lead us to being able to grow revenues that push capital into the LEO Token while also focusing on growing our MAUs (currently ~1,600 MAUs and trending quickly toward 2,000).
As we continue to grow the user base, our monetization of the platform grows. More users = more page views = more ad revenue. More users = more potential premium subscribers. More users = more creators to promote their content. More users = more potential subscribers to authors via LeoSubscriptions.
In my opinion, this is a very solid business model. What proof do I have in saying that? Look at any major Web2 platform like Facebook or X: how have they monetized themselves? Primarily ad revenue. More recently, they started offering Premium services.
The business model is identical to Web2 and that's one major reason why I believe it will work. We've taken this business model and "Web3-ified" it by making 100% of the revenue flow back into the LEO Token itself.
So the beneficiary of the growing revenue is the LEO Token Economy.
As the LEO Token Economy grows (LEO's Market Cap), the rewards in $$ terms on Threads & Posts grows too. This leads to more users getting interested and active for more rewards.
This leads to more growth in the various revenue streams which then brings more cash flow to the token.
The network effects are very interesting, but they'll take time to play out. None of this has been easy to build up to this point and the future won't be easy either. To build a real business is difficult. To build a real business in crypto is seemingly insurmountable.
But we've got something special right now. Premium and Ad Revenue are bringing cash into the LEO Token on a monthly basis. Now we just need to scale up.
Ready to Earn More HIVE Rewards?
Going Premium on INLEO is the #1 way to grow your Hive account and earn more rewards.
When you're premium, you get access to exclusive features:
Premium
- Orange checkmark next to your username- More Curation on Your Blog Posts by
Coming Soon
- Advanced User Dashboard
- Auto-AI summarize your Long-Form Posts into Threadstorms
- Access to LeoAI Chatbot
- NFT profile picture (PFP)
- Pinned threads
- Favorites menu
The recent changes to
If you want to increase your earnings on Hive and enjoy some exclusive features, I highly recommend trying Premium for 1 month. If you're not happy with it, DM/Tag me anywhere after a month and let me know that you weren't satisfied with Premium and I will personally refund your subscription back to you.
As I mentioned in this blog post, INLEO is aiming to build a real, sustainable business model that drives revenue to LEO every single month. Growing to 1,000 Premium Subscribers will radically change the face of the LEO Token Economy and our goal is to get there by March 31st, 2024.
If you're ready to go Premium on this 30-day money-back guarantee, sign up today and then drop a comment below this blog post letting me know you went premium. I'm keeping everyone who does this bookmarked on my browser so I can keep an eye on your experience and look for ways to improve it.
Let's get it, 🦁s